Chinese automakers talk to UK manufacturing officials in Britain

Employees assemble a Jaguar  E-PaceƂ compact sport utility vehicle (SUV) on the production line for the second phase of the Chery  Jaguar;  Land Rover Automotive Co. factory in Changshu, China, Wednesday, June 27, 2018. Jaguar Land Rover plans to build an electric vehicle in China as the iconic British automaker steps up its game in a rapidly growing market where other brands of luxury from Audi to Mercedes-Benz are plowing the cash to win leadership.  Photographer: Qilai Shen/Bloomberg - Qilai Shen/Bloomberg

Employees assemble a Jaguar E-Pace compact sport utility vehicle (SUV) on the production line of the second phase at the Chery Jaguar Land Rover Automotive Co. factory in Changshu, China, Wednesday, June 27, 2018. Jaguar Land Rover plans to build an electric vehicle in China as the iconic British automaker steps up its game in a rapidly growing market where other luxury brands from Audi to Mercedes-Benz are pouring money to gain leadership. Photographer: Qilai Shen/Bloomberg – Qilai Shen/Bloomberg

Chinese automakers, including Chery, have held talks with British officials over manufacturing in Britain in a bid to potentially boost the country’s strained auto industry.

The talks are believed to be at an early stage. However, they could lay the groundwork for potential investments in the future.

Chery, which plans to sell cars in Britain from next year, is among those who would be interested in some local manufacturing. The company already has an inverse relationship where it manufactures Land Rover and Jaguar cars in China under a joint venture.

A possible investment in British manufacturing could take the form of partnering with European automakers to manufacture vehicles from Chinese designs or outsourcing assembly to British or European factories, according to a person familiar with the talks. .

Another possibility is the construction of full-fledged factories in Europe or the United Kingdom.

The investment would be a significant boost for the UK automotive industry. Manufacturing declined after Honda shut down its Swindon plan in 2021 and Vauxhall owner Stellantis switched from producing cars to vans last year.

Honda’s effective withdrawal from European manufacturing and slow electrification by other brands is seen as an opportunity by Chinese automakers, many of whom have a relative head start in the electric vehicle market.

A slew of Chinese brands are expected to enter the UK car market over the next 18 months and manufacturers are hoping to capture market share quickly, just as Japanese carmakers did in Britain in the 1980s.

Companies are exploring local manufacturing options as the cost of assembly in China rises due to rising living standards across the country.

The location of car factories will depend on the agreements, subsidies and other incentives made available by European countries. High electricity prices in Britain for manufacturers are seen as a hindrance.

However, Britain is still seen as an attractive choice thanks to the growing supply of green energy, huge offshore wind potential and the fact that it is Europe’s second largest car market. after Germany.

Chinese manufacturers are looking overseas as the domestic market becomes saturated. Local car prices are falling as the boom in demand for pandemic-era vehicles comes to an end, leaving the market oversupplied.

A government spokesman said: “The government is committed to ensuring that the UK remains one of the best places in the world for car manufacturing and regularly engages with car companies to secure investment in the United Kingdom.”

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